Genome-wide association studies have identified over one hundred common genetic risk variants associated with type 2 diabetes (T2D). However, most of the heritability of T2D has not been accounted for. In this study, we investigated the contribution of rare and common variants to T2D susceptibility by analyzing exome array data in 1,908 Han Chinese genotyped with Affymetrix Axiom® Exome Genotyping Arrays. Based on the joint common and rare variants analysis of 57,704 autosomal SNPs within 12,244 genes using Sequence Kernel Association Tests (SKAT), we identified significant associations between T2D and 25 variants (9 rare and 16 common) in MUC5B, p-value 1.01×10-14. This finding was replicated (p = 0.0463) in an independent sample that included 10,401 unrelated individuals. Sixty-six of 1,553 possible haplotypes based on 25 SNPs within MUC5B showed significant association with T2D (Bonferroni corrected p values < 3.2×10-5). The expression level of MUC5B is significantly higher in pancreatic tissues of persons with T2D compared to those without T2D (p-value = 5×10-5). Our findings suggest that dysregulated MUC5B expression may be involved in the pathogenesis of T2D. As a strong candidate gene for T2D, MUC5B may play an important role in the mechanisms underlying T2D etiology and its complications.